Management Exam 4 Study Guide

Exam 4 Study Guide Job Structure: relative pay for different jobs within the organization Pay Structure: pay policy resulting from job structure and pay-level decisions ● Differ substantially across countries in terms of both pay level and relative worth of jobs Pay Level: average amount the organization pays for a particular job Equal employment Opportunity: employers must not base differences in pay on an employee’s age, sex, race, or other protected status ● Comparable Worth Policies: no guarantee of equal pay for men/women and whites/minorities or any other group What can employees be paid differently because of? ● Experience, skills, seniority, or job performance Minimum Wage: lowest amount that employers may pay under federal or state law, stated as an amount of pay per hour Fair Labor Standards Act (FLSA): federal law that establishes a minimum wage and requirements for overtime pay and child labor ● Currently $7.25/hour ● Training Wage: lower than minimum wage, paid to workers under age of 20 for up to 90-days, ~85% of minimum wage Overtime Pay: rate under FLSA is 1.5 time employee’s usual hourly rate including any bonuses and piece-rate payments Exempt Employees: managers, outside salespeople, and other employees not covered by FLSA requirement for overtime pay Nonexempt Employees: employees covered by FLSA requirements for overtime pay Product Markets: includes organizations that offer competing goods and services ● Compete on quality, service, and price Labor Markets: organizations must compete to obtain human resources ● Establishes a minimum an organization must pay to hire an employee for a job What does pay range depend on? ● Competitive environment Why are pay policies one of the most important human resource tools? ● For encouraging desired employee behaviors and discouraging undesired behaviors Benchmarking: a procedure in which an organization compares its own practices against those of successful competitors pay surveys How do companies function in global markets? ● Exporting, building facilities, entering facilities What trade agreements facilitate global activities? ● NAFTA, WTO Why should a company go global? ● Access to customers, talent, natural resources, tax advantages Why does a company go global? ● Exporting, licensing, joint ventures, acquisitions, start from scratch Parent Country: country in which the organization's headquarters is located Host Country: country (other than parent country) in which an organization operates a facility Third Country: country that is neither the parent nor the host country Expatriates: employees assigned to work in another country Domestic Company: operations in one country International Organization: sets up operations in one or more foreign countries Multinational Company: builds facilities in a number of different countries in effort to minimize production and distribution costs Global Organization: locates a facilities based on ability to effectively, efficiently, and flexibly produce a product or service, using cultural differences as an advantage Transnational HRM System: makes decision from global perspective, includes managers from many countries, and based on ideas contributed by people representing a variety of cultures Decisions that are the outcome of a transnational HRM system balance what? ● Balance uniformity with flexibility Culture: a community’s set of shared assumptions about how the world works and what ideals are worth striving for ● Most important influence on international HRM Why did China Disney go off track? ● The liability of foreignness Individualism/Collectivism: strength of the relation between an individual and other individuals in the society Power Distance: way the culture deals with unequal distribution of power and defines the amount of inequality that is normal Uncertainty Avoidance: how cultures handle the fact that the future is unpredictable Masculinity/Femininity: emphasis a culture places on practices or qualities that have traditionally been considered masculine or feminine Long-term/Short-term Orientation: suggest whether the focus of cultural values is on the future (long term) or the past and present (short term) Country’s law often dictate requirements for these HRM practices: ● Training, compensation, hiring, firing, and layoffs Local Market Pay Rates/Labor Laws: two relevant human resource issues Preparation for Departure: language instructions and an orientation to the foreign country’s culture Assignment: some combination of a formal program and mentoring relationship to provide ongoing further information about the foreign country’s culture Preparation for Return: providing information about employee’s community and home-country workplace ● From company newsletters, local newspapers, etc.) When establishing performance management methods in other countries consider: ● Legal requirements, local business practices, national cultures Incentive Pay: forms of pay linked to an employee’s performance as an individual, group member, or organization member ● Bonuses, commissions, and stock options Balance Sheet Approach (compensating expatriates): adjusts manager’s compensation so it gives manager same standard of living as in the home country plus extra pay for inconvenience of locating overseas Repatriation: process of preparing expatriates to return home from foreign assignment Communication: expatriate receives information and recognizes changes at home while abroad Validation: giving expatriate recognition for overseas service when they return home External Equity: what they think employees in other organizations earn for doing the same job Internal Equity: what they think other employees holding different jobs within the organization earn for doing work at the same or different levels Individual Equity: what they think other employees in the organization earn for doing the same job as theirs Job evaluation: administrative procedure for measuring relative internal worth of the organization’s jobs Five characteristics of a job that the organization values and choose to pay for: ● Experience ● Education ● Complexity ● Working conditions ● Responsibility Key Jobs: jobs that have relatively stable content and are common among many organizations ● Help create pay jobs Pay Rates: determining salaries for non-key jobs ● Reflect the pay structure in the market Pay Grades: set of jobs having similar with or content, grouped together to establish rates of pay ● May not match market rate Pay Ranges: set of possible pay rates defined by a minimum, maximum, and a midpoint of paying for employees holding a particular job or a job within a particular pay grade Red Circle Rate: pay at a rate that falls above pay range for the job Green Circle Rate: pay at a rate that falls below pay range for the job Pay Differentials: adjustment to a pay rate to reflect differences in working conditions or labor markets Compa-ratio: the ratio of average pay to midpoint pay of range ● CR =1 (midpoint) ● CR > 1 (average pay is above midpoint) ● CR < 1 (average pay is below midpoint) Piecework Rate: a wage based on the amount an employee produces Straight Piecework Plan: employer pays the same rate per piece no matter how much the worker produces Differential Piece Rates: the piece rate depends on the amount produced Standard Hour Plan: incentive plan that pays workers extra work done in less than a preset “standard time” Merit Pay: system of linking pay increases to ratings on performance appraisals ● Merit increases: ○ Annual raise ○ Base pay increase, not a bonus ○ External variables determine size of the pool ○ Performance determines allocation of the pool Commissions: incentive pay calculates as a percentage of sales Straight Commision Plan: some earn only commissions Gainsharing: group incentive program that measures improvements in productivity and effectiveness and distributes a portion of each to employees Group Bonuses: tend to be for smaller work groups, reward the members of a group for attaining a specific goal, usually measured in terms of physical output Team Awards: similar to group bonuses, but more likely to use a broad range of performance measures ● Cost savings, successful completion of project, meeting deadlines Profit Sharing: incentive pay in which payments are a percentage of the organization's profits and do not become part of the employee’s base salary ● Encourages employees to think like owners Stock Options: rights to buy a certain number of shares of stock at a specified price granted to executives ESOPs: an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust ● Most common form of employee ownership Balanced Scorecard: combination of performance measures directed toward the company's long and short term goals and used as the basis for awarding incentive pay ● Four categories of a balanced scorecard: ○ Financial, customer, internal, learning & growth ● Short-term incentives: ○ Bonuses based on ROI ○ Year’s profits ○ Other measures related to organizational goals ○ Actual payment of bonus may be delayed to gain tax advantages ● Long-term incentives: ○ Stock options ○ Stock purchase plans ○ Rationale is that executives will want to do what is best for the organization because that will cause the value of their stock to grow ● Benefits contribute to: ○ Attracting, retaining, and motivating employees Social Security: flat payroll tax on employees and employers Unemployment Insurance: payroll tax on employers that depends on state requirements and experience rating Workers’ Compensation Insurance: provide coverage according to state requirements ● Depend on experience rating Family and Medical Leave: up to 12 weeks of unpaid leave for childbirth, adoption, or serious illness Healthcare: for employers with at least 50 employees, payment of a fee to the federal government if the employer does not meet conditions for providing health insurance benefits Premiums: amount employees pay each month for health insurance Co-pays: amount employees pay when they visit a doctor Deductible: amount of out of pocket expenses employee pays before insurance kicks in Consolidated Omnibus Budget Reconciliation Act of 1985: federal law that requires employers to permit employees or their dependents to extend their health insurance coverage at group rates for up to 36 months following a layoff, reduction in hours, or employees death Short-term Disability Insurance: insurance that pays a percentage of disabled employee’s salary as benefits to employee for six months or less Long-term Disability Insurance: insurance that pays a percentage of a disabled employee’s salary after an initial period and potentially for the rest of their life Contributory Plan: retirement plan funded by contributions from employer and employee Non-contributory Plan: retirement plan funded entirely by employer contributions Defined Benefit Plan: pension plan that guarantees a specified level of retirement income ● Employer sets up a pension fund to invest contributions Employee Retirement Income Security Act: federal law that increased responsibility of pension plan ● Trustees to protect retirees Pension Benefit Guaranty Corporation: federal agency that insures retirement benefits and guarantees retirees a basic benefit if employer experiences financial difficulties Defined Contribution Plan: employer sets up an individual account for each employee and specifies the size of the investment into that account Cash Balance Plan: employer sets up an individual account for each employee and contributes a percentage of the employee’s salary Cafeteria Style Plan: benefits plan that offers employees a set of alternatives from which they can choose the types and amount of benefits they want Labor Unions: formed for the purpose of representing their members’ interests and resolving conflicts with employees Craft Union: members all have a particular skill or occupation Industrial Union: members are linked by their work in a particular industry Checkoff Provision: contract provision under which the employer, on behalf of the union, automatically deducts unions dues from employees’ paychecks Closed Shop: outlawed in 1947, required companies to only hire union members Union Shop: companies can hire non-union members but they must join after a defined period of time Agency Shop: employees don’t have to join the union, but must pay union dues National Labor Relations Board: conducts and certifies representation elections and prevents unfair labor practices ● 5-members, general counsel, and 52 regional and field offices Collective Bargaining: negotiation between union representatives to arrive at a contract defining conditions of employment for the term of the contract and to administer that contract Strike: collective decision by union members not to work until certain demands or conditions are met Lockout: employers excludes workers from the workplace until they meet certain conditions Meditation: conflict resolution procedure in which a mediator hears views of both sides and facilitates negotiation process but has no formal authority to dictate a resolution Fact Finder: third party to collective bargaining who reports reasons for a dispute, views and arguments of both sides, and possibly a recommended settlement which parties may decline Arbitration: conflict resolution procedure in which an arbitrator or arbitration board determines a binding settlement Contract Administration: carrying out agreements terms and resolving conflicts over interpretation or violation of the agreement Grievance Procedure: process for resolving union management conflicts over interpretation or violation of a collective bargaining agreement